This invention relates generally to activating a contactless transaction card and, more particularly, to network-based methods and systems for issuing and activating a contactless transaction card for use by a cardholder in processing payment transactions.
Historically, the use of “charge” cards for consumer transaction payments was at most regional and based on relationships between local credit issuing banks and various local merchants. The payment card industry has since evolved with the issuing banks forming associations (e.g., MasterCard®) and involving third party transaction processing companies (e.g., “Merchant Acquirers”) to enable cardholders to widely use charge cards at any merchant's establishment, regardless of the merchant's banking relationship with the card issuer.
For example, FIGS. 1 and 2 of the present application show exemplary payment-by-card systems. FIG. 1 shows an exemplary private label payment card system, and FIG. 2 shows an exemplary multi-party payment card industry system for enabling payment-by-card transactions in which the merchants and issuer do not need to have a one-to-one special relationship. Various scenarios exist in the payment-by-card industry today, where the card issuer has a special or customized relationship with a specific merchant, or group of merchants. These special or customized relationships may, for example, include private label programs, co-brand programs, proprietary card brands, rewards programs, and others. The special or customized issuer-merchant relationships often require direct communications between the parties for transaction authorization and/or clearing (e.g., for financial transactions). Further, the issuer may be required to maintain back office processes to manage the financial aspects of these special or customized relationships. Alternatively, the issuers may exploit communications through merchant acquirers to facilitate indirect communications with the merchants.
There are also scenarios in the payment-by-card industry where the card issuer does not have a special or customized relationship with a specific merchant, or group of merchants. These types of transactions are typically processed using a multi-party payment card system similar to the one shown in FIG. 2.
Traditional card account payment environments involve a merchant-controlled point of interaction (POI). Traditional points of interaction include point of sale devices, access through a merchant website, and interaction through a merchant telephone to initiate the authorization request. Collectively, these traditional points of interaction might be referred to as a merchant environment. For all interactions within this environment, an account number associated with a cardholder's financial transaction card is entered into the specific merchant's environment in order to conduct the transaction and/or obtain an authorization.
The specific cardholder interactions could include the cardholder giving his financial transaction card to a merchant to swipe or key into the merchant point of sale device, the merchant initiating a telephone call and entering the account number through interactive voice or through the telephone keypad, the cardholder himself swiping his card into the merchant's point of sale device, or the merchant or cardholder entering the account number into the merchant's website. These types of transaction cards are sometime referred to as contact transaction cards since these cards required contact (i.e., swiping) with the merchant point-of-sale device. Payments for approved transactions are managed with the issuer or merchant's acquirer based on the specific card payment network or closed loop environment.
However, transaction cards and merchant POIs have evolved over the years to now include what are sometimes referred to as “contactless” transaction cards. These contactless transaction cards may include a transaction card having contactless technology, a key fob programmed with contactless technology, or a mobile phone programmed with contactless technology. Such contactless transaction cards are able to communicate with a merchant's contactless point-of sale device. For example, MasterCard® has a service called MasterCard PayPass®, which is a “contactless” way to pay a merchant. A simple tap of your contactless card, key fob, or mobile phone at the merchant's contactless point-of-sale device (or placing the contactless card in close proximity to the POS device) is all it takes to pay at checkout. The contactless card is capable of wirelessly transmitting account data to the point-of-sale device.
Although contactless transaction cards are convenient for consumers to use and carry, the issuance of these contactless transaction cards has been somewhat limited. The expense associated with an issuer issuing these contactless cards to replace an existing contact transaction card and the difficulty in activating these cards by a consumer are at least two reasons why these cards have seen limited circulation.
Accordingly, it would be beneficial to have a method and system for facilitating the issuance and activation of contactless transaction cards to consumers. The method and system would help reduce costs incurred by the issuer when issuing these cards, and would make activating these cards by the cardholder easier.